Cimetrix (CMXX) 10-Q 15 May 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2014	8-May-14
Document and Entity Information	'	'
Entity Registrant Name	'Cimetrix Incorporated	'
Document Type	'10-Q	'
Document Period End Date	31-Mar-14	'
Amendment Flag	'false	'
Entity Central Index Key	'0000786620	'
Current Fiscal Year End Date	'--12-31	'
Entity Common Stock, Shares Outstanding	'	45,042,006
Entity Filer Category	'Smaller Reporting Company	'
Entity Current Reporting Status	'Yes	'
Entity Voluntary Filers	'No	'
Entity Well-known Seasoned Issuer	'No	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q1	'

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current assets:	'	'
Cash	$749,000	$887,000
Accounts receivable, net	1,003,000	797,000
Inventories	52,000	56,000
Prepaid expenses and other current assets	97,000	72,000
Deferred tax asset - current portion	182,000	144,000
Total current assets	2,083,000	1,956,000
Property and equipment, net	52,000	48,000
Goodwill	64,000	64,000
Deferred tax asset - long-term portion	1,150,000	1,194,000
Other assets	6,000	6,000
Total assets	3,355,000	3,268,000
Current liabilities:	'	'
Accounts payable	69,000	56,000
Accrued expenses	116,000	178,000
Deferred revenue	331,000	273,000
Total liabilities	516,000	507,000
Commitments and contingencies	'	'
Stockholders' equity:	'	'
Common stock: $.0001 par value, 100,000,000 shares authorized, 45,042,006 and 45,042,006 shares issued, respectively	4,000	4,000
Additional paid-in capital	33,805,000	33,774,000
Treasury stock: 25,000 shares at cost	-49,000	-49,000
Accumulated deficit	-30,921,000	-30,968,000
Total stockholders' equity	2,839,000	2,761,000
Total liabilities and stockholders' equity	$3,355,000	$3,268,000

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Statement of Financial Position	'	'
Common Stock, par or stated value	$0.00	$0.00
Common Stock, shares authorized	100,000,000	100,000,000
Common Stock, shares issued	45,042,006	45,042,006
Treasury Stock, shares	25,000	25,000

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:	'	'
New software licenses	$1,105,000	$1,115,000
Software license updates and product support	314,000	234,000
Total software revenues	1,419,000	1,349,000
Professional services	54,000	50,000
Total revenues	1,473,000	1,399,000
Operating costs and expenses:	'	'
Cost of revenues	502,000	583,000
Sales and marketing	257,000	266,000
Research and development	283,000	191,000
General and administrative	368,000	315,000
Depreciation and amortization	10,000	17,000
Total operating costs and expenses	1,420,000	1,372,000
Income from operations	53,000	27,000
Other income (expenses):	'	'
Other income	'	3,000
Total other expenses, net	'	3,000
Income before income taxes	53,000	30,000
Provision for income taxes	6,000	1,000
Net income	$47,000	$29,000
Net income per common share:	'	'
Basic	$0	$0
Diluted	$0	$0
Weighted average number of shares outstanding:	'	'
Basic	45,227,000	45,746,000
Diluted	45,852,000	46,373,000

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:	'	'
Net income	$47,000	$29,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities:	'	'
Depreciation and amortization	10,000	17,000
Provision for doubtful accounts	20,000	'
Stock-based compensation	31,000	22,000
Deferred taxes	6,000	'
Changes in operating assets and liabilities	'	'
Accounts receivable	-226,000	-14,000
Inventories	4,000	'
Prepaid expenses and other current assets	-25,000	10,000
Accounts payable	1,000	-5,000
Accrued expenses	-62,000	-74,000
Deferred revenue	58,000	44,000
Net cash (used in) provided by operating activities	-136,000	29,000
Cash flows from investing activities:	'	'
Proceeds received from deposits	'	5,000
Purchase of property and equipment	-2,000	-16,000
Net cash used in investing activities	-2,000	-11,000
Cash flows from financing activities:	'	'
Payments for repurchase of common stock	'	-9,000
Net cash used in financing activities	'	-9,000
Net (decrease) increase in cash	-138,000	9,000
Cash, beginning of period	887,000	1,027,000
Cash, end of period	749,000	1,036,000
Supplemental Cash Flow Information:	'	'
Cash paid for income taxes	1,000	1,000
Non-cash Investing Activities:	'	'
Property and equipment included in accounts payable	$12,000	'

Note_1_Organization_and_Summar

Note 1 - Organization and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2014
Notes	'
Note 1 - Organization and Summary of Significant Accounting Policies	'
	NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	Organization – Cimetrix Incorporated, a Nevada corporation, and its subsidiaries (Cimetrix or the Company) is a software engineering company that designs, develops, markets and supports factory connectivity and equipment control products for today’s smart, connected factories. The Company’s primary customers are original equipment manufacturers (OEMs) that supply precision electronics manufacturing equipment for semiconductor wafer fabrication, solar/photovoltaic (PV), high-brightness light-emitting diode (HB-LED) and other electronics manufacturing.
	Basis of Presentation – The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Cimetrix Japan K.K., Cimetrix Europe, Inc. and Cimetrix Data Management Solutions, Inc. All significant inter-company accounts and transactions have been eliminated in consolidation. The interim financial information of the Company as of March 31, 2014 and for the three month periods ended March 31, 2014 and 2013 is unaudited, and the balance sheet as of December 31, 2013 is derived from audited financial statements. The accompanying condensed consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense footnotes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in Note 1 to the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. In the opinion of management, all adjustments that are necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results that can be expected for the entire year ending December 31, 2014. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.

Note_2_Stockbased_Compensation

Note 2 - Stock-based Compensation	3 Months Ended
	Mar. 31, 2014
Notes	'
Note 2 - Stock-based Compensation	'
	NOTE 2 – STOCK-BASED COMPENSATION
	The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) Topic 718. Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award granted and recognized as expense over the period in which the award is expected to vest.
	The stock-based compensation expense has been allocated to the various categories of operating costs and expenses in a manner similar to the allocation of payroll expense as follows:
		Three Months Ended
		March 31,
		2014	2013
	Cost of revenues	$6,000	$6,000
	Sales and marketing	5,000	3,000
	Research and development	5,000	4,000
	General and administrative	15,000	9,000
	Total stock-based compensation expense	$31,000	$22,000
	During the three months ended March 31, 2014, no options to purchase shares of the Company’s common stock were granted to the Company’s employees.
	There were no stock-based compensation costs from vested restricted stock shares in the three month periods of March 31, 2014 or 2013.
	As of March 31, 2014, the total unrecognized compensation cost related to non-vested stock-based awards was $232,000. The unrecognized compensation cost is expected to be recognized over a weighted average period of 4.15 years.

Note_3_Earnings_Per_Share

Note 3 - Earnings Per Share	3 Months Ended
	Mar. 31, 2014
Notes	'
Note 3 - Earnings Per Share	'
	NOTE 3 – EARNINGS PER SHARE
	Basic earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding, including unissued but vested restricted stock shares deemed to be participating securities, during the period. Diluted earnings per common share is computed by dividing the net income for the period by the sum of the weighted-average number of common shares outstanding plus the weighted-average common stock equivalents which would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding options and unvested restricted stock. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method.
	The following table sets forth the computation of basic and diluted earnings per common share:
		Three Months Ended
		March 31,
		2014	2013
	Numerator:
	Net income	$47,000	$29,000
	Denominator:
	Basic weighted average shares outstanding	45,227,000	45,746,000
	Effect of dilutive securities:
	Stock options	625,000	627,000
	Diluted weighted average shares outstanding	45,852,000	46,373,000
	Net income per share
	Basic	$0.00	$0.00
	Diluted	$0.00	$0.00
	Potentially dilutive securities representing approximately 4,280,000 and 3,779,000 shares of common stock at March 31, 2014 and 2013, respectively, were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive.

Note_4_Debt

Note 4 - Debt	3 Months Ended
	Mar. 31, 2014
Notes	'
Note 4 - Debt	'
	NOTE 4 – DEBT
	Revolving Bank Line of Credit - The Company and Silicon Valley Bank (the “Bank”) entered into a Loan and Security Agreement (“Agreement”), effective as of September 27, 2011. On September 26, 2012, the Company and the Bank entered into a First Amendment to the Loan and Security Agreement. The First Amendment extended the maturity date of the Agreement to September 25, 2013. On October 1, 2013, the Company and the Bank entered into a Second Amendment to the Agreement, effective September 25, 2013. The Second Amendment extended the maturity date of the Agreement to September 24, 2014, reduced the applicable interest rate and certain other fees associated with Agreement and increased the level of tangible net worth required to be maintained. Line of credit advances are available to the Company in accordance with a defined “Availability Amount”, based in part on qualifying accounts receivable, up to a maximum of $1 million. The line of credit bears interest at the prime rate plus .75%, payable monthly. The line of credit is collateralized by substantially all operating assets of the Company. Interest payments are payable on the first day of each month with all principal advances payable on the maturity date of the line of credit.
	The line of credit agreement also contains numerous negative and affirmative covenants including, among others, restricting certain actions by the Company without the Bank’s consent, such as are typically included in similar loan agreements, including restrictions on the payment of dividends, restrictions on incurring additional debt, prohibitions restricting major corporation transactions, including a sale of the business, and a requirement that the Company retain certain key employees.
	At March 31, 2014, the Company had no borrowings against the line of credit and management believes the Company was in compliance with all covenants.

Note_5_Common_Stock

Note 5 - Common Stock	3 Months Ended
	Mar. 31, 2014
Notes	'
Note 5 - Common Stock	'
	NOTE 5 – COMMON STOCK
	The Company had 185,000 vested restricted stock awards for which shares of common stock have not been issued as of March 31, 2014 and December 31, 2013.

Note_6_Related_Party_Transacti

Note 6 - Related Party Transactions	3 Months Ended
	Mar. 31, 2014
Notes	'
Note 6 - Related Party Transactions	'
	NOTE 6 – RELATED PARTY TRANSACTIONS
	During the three months ended March 31, 2014 and 2013, the Company had the following revenues from one customer that was also a shareholder of the Company:
		Three Months Ended
		March 31,
		2014	2013
	New software licenses	$78,000	$13,000
	Software license updates and product support	31,000	19,000
	Total software revenues	109,000	32,000
	Professional services	2,000	-
	Total revenues	$111,000	$32,000
	The Company had accounts receivable from one customer that was also a shareholder totaling $11,000 and $22,000 at March 31, 2014 and December 31, 2013, respectively.

Note_7_Income_Taxes

Note 7 - Income Taxes	3 Months Ended
	Mar. 31, 2014
Notes	'
Note 7 - Income Taxes	'
	NOTE 7 – INCOME TAXES
	The Company’s income tax calculations are based on application of the respective U.S. federal and state laws. Accordingly, the Company recognizes tax liabilities based upon estimates of whether additional taxes will be due when such estimates are more likely than not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. To the extent the final tax liabilities are different than the amounts originally accrued, the increases or decreases are recorded as income tax expense or benefit in the Condensed Consolidated Statements of Income.
	As part of the process of preparing consolidated financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current income tax exposure together with assessing temporary differences resulting from differing treatment of items for income tax and financial accounting purposes. These temporary differences result in deferred tax assets and liabilities, the net amount of which is included in the Company’s Condensed Consolidated Balance Sheets. When appropriate, the Company records a valuation allowance to reduce its deferred tax assets to the amount that the Company believes is more likely than not to be realized. Key assumptions used in estimating a valuation allowance include potential future taxable income, projected income tax rates, expiration dates of net operating loss and tax credit carry forwards, and ongoing prudent and feasible tax planning strategies.
	As of December 31, 2013, the Company had a net operating loss carry forward of approximately $17,105,000 that may be offset against future taxable income. Portions of the net operating loss carry forward expire at various times during the period from 2018 through 2034. Use of this net operating loss carry forward could also be limited in the event of substantial changes in the Company’s ownership.
	As of March 31, 2014, the value of the deferred tax asset was $1,332,000, reflecting a decrease of $6,000 from December 31, 2013, as a result of the net income for the three months ended March 31, 2014.

Note_2_Stockbased_Compensation1

Note 2 - Stock-based Compensation: Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Tables)	3 Months Ended
	Mar. 31, 2014
Tables/Schedules	'
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs	'
	The stock-based compensation expense has been allocated to the various categories of operating costs and expenses in a manner similar to the allocation of payroll expense as follows:
		Three Months Ended
		March 31,
		2014	2013
	Cost of revenues	$6,000	$6,000
	Sales and marketing	5,000	3,000
	Research and development	5,000	4,000
	General and administrative	15,000	9,000
	Total stock-based compensation expense	$31,000	$22,000

Note_3_Earnings_Per_Share_Sche

Note 3 - Earnings Per Share: Schedule of Computation of Earnings Per Share, Basic and Diluted (Tables)	3 Months Ended
	Mar. 31, 2014
Tables/Schedules	'
Schedule of Computation of Earnings Per Share, Basic and Diluted	'
		Three Months Ended
		March 31,
		2014	2013
	Numerator:
	Net income	$47,000	$29,000
	Denominator:
	Basic weighted average shares outstanding	45,227,000	45,746,000
	Effect of dilutive securities:
	Stock options	625,000	627,000
	Diluted weighted average shares outstanding	45,852,000	46,373,000
	Net income per share
	Basic	$0.00	$0.00
	Diluted	$0.00	$0.00

Note_6_Related_Party_Transacti1

Note 6 - Related Party Transactions: Schedule of Revenues From One Customer That Was Also A Shareholder (Tables)	3 Months Ended
	Mar. 31, 2014
Tables/Schedules	'
Schedule of Revenues From One Customer That Was Also A Shareholder	'
	During the three months ended March 31, 2014 and 2013, the Company had the following revenues from one customer that was also a shareholder of the Company:
		Three Months Ended
		March 31,
		2014	2013
	New software licenses	$78,000	$13,000
	Software license updates and product support	31,000	19,000
	Total software revenues	109,000	32,000
	Professional services	2,000	-
	Total revenues	$111,000	$32,000

Note_2_Stockbased_Compensation2

Note 2 - Stock-based Compensation: Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Allocated Share-based Compensation Expense	$31,000	$22,000
Cost of Sales	'	'
Allocated Share-based Compensation Expense	6,000	6,000
Selling and Marketing Expense	'	'
Allocated Share-based Compensation Expense	5,000	3,000
Research and Development Expense	'	'
Allocated Share-based Compensation Expense	5,000	4,000
General and Administrative Expense	'	'
Allocated Share-based Compensation Expense	$15,000	$9,000

Note_2_Stockbased_Compensation3

Note 2 - Stock-based Compensation (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Options, Granted	0	'
Allocated Share-based Compensation Expense	$31,000	$22,000
Total unrecognized compensation cost related to non-vested stock-based awards	232,000	'
Unrecognized compensation cost, period for recognition	'4 years 1 month 24 days	'
Restricted Stock	'	'
Allocated Share-based Compensation Expense	$0	$0

Note_3_Earnings_Per_Share_Sche1

Note 3 - Earnings Per Share: Schedule of Computation of Earnings Per Share, Basic and Diluted (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Numerator:	'	'
Net income	$47,000	$29,000
Denominator:	'	'
Basic weighted average shares outstanding	45,227,000	45,746,000
Effect of dilutive securities:	'	'
Stock options	625,000	627,000
Diluted weighted average shares outstanding	45,852,000	46,373,000
Earnings Per Share	'	'
Basic	$0	$0
Diluted	$0	$0

Note_3_Earnings_Per_Share_Deta

Note 3 - Earnings Per Share (Details)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Details	'	'
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	4,280,000	3,779,000

Note_4_Debt_Details

Note 4 - Debt (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Line of Credit Facility, Initiation Date	27-Sep-11
Line of Credit Facility, Expiration Date	24-Sep-14
Line of Credit Facility, Maximum Borrowing Capacity	$1,000,000
Line of Credit Facility, Collateral	'The line of credit is collateralized by substantially all operating assets of the Company. Interest payments are payable on the first day of each month with all principal advances payable on the maturity date of the line of credit.
Line of Credit Facility, Covenant Terms	'The line of credit agreement also contains numerous negative and affirmative covenants including, among others, restricting certain actions by the Company without the Bank’s consent, such as are typically included in similar loan agreements, including restrictions on the payment of dividends, restrictions on incurring additional debt, prohibitions restricting major corporation transactions, including a sale of the business, and a requirement that the Company retain certain key employees.
Line of Credit Facility, Amount Outstanding	$0
Line of Credit	'
Debt Instrument, Description of Variable Rate Basis	'prime
Debt Instrument, Basis Spread on Variable Rate	0.75%

Note_5_Common_Stock_Details

Note 5 - Common Stock (Details) (Restricted Stock Units (RSUs))	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Restricted Stock Units (RSUs)	'	'
Vested awards for which common stock has not been issued	185,000	185,000

Note_6_Related_Party_Transacti2

Note 6 - Related Party Transactions: Schedule of Revenues From One Customer That Was Also A Shareholder (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
New software licenses	$1,105,000	$1,115,000
Software license updates and product support	314,000	234,000
Total software revenues	1,419,000	1,349,000
Professional services	54,000	50,000
Total revenues	1,473,000	1,399,000
Investor 1	'	'
New software licenses	78,000	13,000
Software license updates and product support	31,000	19,000
Total software revenues	109,000	32,000
Professional services	2,000	0
Total revenues	$111,000	$32,000

Note_6_Related_Party_Transacti3

Note 6 - Related Party Transactions (Details) (Investor 1, USD $)	Mar. 31, 2014	Dec. 31, 2013
Investor 1	'	'
Accounts Receivable, Net	$11,000	$22,000

Note_7_Income_Taxes_Details

Note 7 - Income Taxes (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Net operating loss carryforward	'	'	$17,105,000
Net deferred tax assets	1,332,000	'	'
Provision for income taxes	$6,000	$1,000	'
Minimum	'	'	'
Operating Loss Carryforwards, Expiration Date	31-Dec-18	'	'
Maximum	'	'	'
Operating Loss Carryforwards, Expiration Date	31-Dec-34	'	'